Stellar Capital Partners (formerly ConvergeNet Holdings) is an investment holding company based in South Africa with a diversified portfolio of mainly unlisted investments in the industrial, communications and financial services sectors.

The group’s main listed investment is a 34.62% stake in Torre Industries, whilst unlisted investments include Tellumat (100%), Praxis Financial Services (51%), Integrated Equipment Rentals (50%) and Cadiz Holdings (97%). The portfolio is managed by the company’s dedicated investment manager Thunder Securitisations.

Stellar Capital shares are today listed on the Johannesburg Stock Exchange (JSE) with a market cap of R1.7 billion. The group has a young history on the JSE, having only been converted to an investment holding company in the 2016 financial year. Investors therefore don’t yet have a Stellar Capital share price history on which to base a decision to buy the shares.

Stellar Capital aims to drive performance by holding a combination of strategic equity instrument investments, whilst earning high levels of income from dividends and a credit investment portfolio. Investments are held in three core areas, namely Industrials and Support Services, Financials and disruptive opportunities including businesses with potential to displace established market leaders.

The company has initially decided to buy into South African businesses with focused international operations, whilst retaining an ability to invest in foreign businesses over time. Overall, the company targets net asset value growth and shareholder distributions growth of at least 15% per year.

The group had an active year in 2016, converting from an operating entity into an investment holding company, completing disposals of Digicore Holdings and Goliath Gold Mining, and following through with the acquisitions of a stake in Torre Industries and a 45.99% additional stake in Cadiz Holdings. A total of R1.15 billion capital was raised through the issue of shares, and the investment portfolio was improved in terms of scale and quality.

The company experienced a R36 million for 2016, having been impacted by tough trade conditions in the industrial sector, with Torre Industries and IE Rentals particularly suffering. Communications company Tellumat performed relatively well for the year, and the group will seek to capitalise by expanding managed services and partnering with key technology partners to become a technology provider of choice.

Cadiz Asset Management is in the midst of a turnaround strategy, with the next phase to start delivering profitable growth which will benefit Stellar Capital.

Stellar Capital has not quite delivered on its stated aims, and investors have not been overly enthusiastic to buy Stellar Capital shares. Some investment analysts argue that the group doesn’t have the strongest investment portfolio, with uncertain prospects for long-term growth. Stellar Capital share price has taken a steady dip down the live online stocks chart of late, with the shares hovering at around R1.40 in November 2016. Based on the group’s mediocre financial data, plenty of work needs to be done if Stellar Capital wants to attract investors to buy the shares.

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1. Start by Filling in the BUY THIS SHARE form.
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